Monthly Archives: September 2015

If you want to know what the CEO of your health insurance company earned last year, don’t ask the Alabama Department of Insurance.

That information is no longer public – because of a new law that shields much of the information used to review the state’s insurance providers. The law reverses an open-book policy that had been in place for years.

Officials with the Alabama Department of Insurance sought the change during the regular legislative session – in an effort to comply with the requirements of an organization that accredits insurance regulators, said Chief of Staff Mark Fowler. The bill initially made work papers confidential, but included salaries after conversations with members of the insurance industry.

The chief executives of Aetna Inc. and Anthem Inc. defended their merger deals before a Senate subcommittee, facing sharply critical testimony that raised questions about the impact of health-insurance consolidation.

Aetna is seeking to acquire Humana Inc., in a $34 billion transaction focused largely on the private Medicare plans known as Medicare Advantage. Anthem aims to take overCigna Corp. in a $48 billion deal. The two deals together would shrink the top five U.S. health insurers to a big three, each with annual revenue of more than $100 billion. The third player would be UnitedHealth Group Inc.

In their testimony before the Senate Judiciary subcommittee on antitrust, Mark T. Bertolini of Aetna and Joseph R. Swedish of Anthem emphasized that health care is delivered largely on a local basis, and they argued that markets would remain competitive if they completed their mergers. Both CEOs also said their deals would benefit consumers and encourage new forms of payment to health-care providers.

Mr. Bertolini said just 8% of Medicare beneficiaries would be covered by the combined Aetna-Humana, and “robust competition will remain in the Medicare market.” Mr. Swedish said Anthem and Cigna had “very limited and, in most cases, no market overlap.”

But other witnesses were skeptical of the deals’ potential benefits. Leemore Dafny, a professor at Northwestern University’s Kellogg School of Management, said consumers are “paying a premium on our premium” because of lack of competition among insurers.Richard J. Pollack, CEO of the American Hospital Association, said his group was concerned the insurance deals would reduce choices and raise costs for consumers.

Sen. Al Franken, a Minnesota Democrat, grilled the two insurance CEOs on whether they would commit to passing along any savings from their deals to consumers, asking repeatedly for such a pledge. After the question was repeated three times, Mr. Bertolini said the “savings will be passed along in the price of our products.” Mr. Swedish also promised savings. But Sen. Franken noted that he ran out of time to continue, and said, “We could have gone quicker if those answers were yes.”

WASHINGTON — Doctors and hospitals are stepping up their criticism of proposed health insurance company mergers.

In a new study to be released on Tuesday, theAmerican Medical Association says that most insurance markets in the United States are dominated by a few companies and would become even more concentrated with a plan by Anthem to acquire Cigna and a proposal byAetna to buy Humana.

The American Hospital Association raised similar concerns last week in a letter to the Justice Department that said the proposed Aetna-Humana deal “threatens serious and widespread competitive harm” to Medicarebeneficiaries because it would reduce options in the market for private Medicare Advantage plans. More than 30 percent of the 55 million Medicare beneficiaries have enrolled in such private plans, which provide an alternative to traditional Medicare.

The doctors’ group said the proposed mergers could reduce competition in up to 154 metropolitan areas in 23 states.

In its study, the medical association cited federal antitrust guidelines that say, “Mergers should not be permitted to create, enhance or entrench market power.” Under the guidelines, “a merger enhances market power if it is likely to encourage one or more firms to raise price, reduce output, diminish innovation or otherwise harm customers as a result of diminished competitive constraints.”

Two proposed mergers involving four of the nation’s biggest health insurers could reduce competition in an important industry. That’s why federal and state regulators need to closely study these deals and, if necessary, force the companies to sell some parts of their businesses.

Earlier this summer, Anthem agreed to acquire Cigna for $48 billion, andAetna announced a $37 billion takeover of Humana. The antitrust division of the Justice Department and state governments are reviewing the deals. If regulators approve both transactions, the number of big national health insurers would drop from five to three.

The companies say that being bigger will give them the ability to negotiate lower prices with hospitals, physicians and drug makers and make health care more efficient. Not surprisingly, trade associations representing doctors and hospitals are not thrilled by that idea. They say these mergers will not only hurt them, but will hit consumers with higher premiums and other costs.

Nonprofit insurer Blue Shield of California boosted executive compensation by $24 million in 2012 — a 64% jump over the previous year — according to a confidential state audit reviewed by The Times.

The health insurance giant won’t say who got the money or why. But Blue Shield’s former public policy director, Michael Johnson, who left this year and is now a company critic, said senior officials at the insurer told him that former Chief Executive Bruce Bodaken received about $20 million as part of his 2012 retirement package, on top of his annual pay.

Half a dozen other top executives also left the company near the end of 2012, which could have accounted for some of the spike in compensation. Some of this severance or retirement money may be paid out over time, extending beyond 2012.

The San Francisco insurer declined to confirm the total compensation for Bodaken, who was chairman and CEO from 2000 to 2012.

The audit’s tally of $61 million in pay for nearly 60 executives in 2012 appears to include Bodaken and others who left. But Blue Shield omitted their pay from a separate state filing that required 2012 compensation data on the company’s 10-highest paid employees.